Purpose

To make available to rural communities through Rural Utility Service borrowers grants to be used for revolving loan funds for infrastructure, community facilities, healthcare and educational type projects.

Applicant Eligibility

Grant funds may be granted to any RUS financed electric and telephone borrower that is not financially distressed, delinquent on any federal debt, or in bankruptcy proceedings.

Uses of Grant Funds

• To establish a revolving loan fund
• Project feasibility studies/technical assistance
• Business incubators established by non-profit
• Community development assistance (non-profit and public bodies)
• Projects to public, for-profit or non-profit entities to provide education and training to rural residents to facilitate economic development
• Projects to public, for-profit or non-profit entities to provide medical care to rural residents

Revolving loan funds

Revolving loan funds will be provided only to RUS borrowers on a non pass-through basis. RUS borrowers will, in turn, provide loans to foster rural economic development.

Administration of Revolving Loan Funds

• Initial loan funds may be used for:
• Business incubators by non-profit groups
• Community development
• Facilities and equipment for education
• Facilities and equipment for medical care
• Loans made from repayments of the initial loans made by RUS borrowers may be used for any rural economic development purpose in accordance with a prior agreement between the borrower and RBS.
• Borrowers may charge reasonable loan servicing fees.
• The borrower will provide a Board Resolution certifying a commitment to provide and maintain additional funding the revolving loan fund in an amount no less than 20% of the RBS grant approved.
• The borrower must supply RBS a proposed budget demonstrating that no more than 10% of grant funds received are used to cover operating expenses of the revolving loan fund.
• The funds must be lent to the project within 3 years of the date of grant approval by RBS.
• RBS requires that the revolving loan program be administered in accordance with a rural
• development plan, developed by the borrower and approved by RBS.
• Borrowers applying for grant funds must submit a scope of work to RBS.

Rural Development Plan

• RBS requires that the revolving loan program be administered in accordance with a rural development plan, developed by the borrower and approved by RBS.
• The plan must outline the following:

1. Specific objectives for the revolving loan fund program, lending parameters, max and min loan,
2. Documentation of borrower’s coordination of lending activities with other local entities that provide financing for rural economic development.

Eligibility criteria if other than outlined in this section

The application process and method of disposition of the funds to the project owner

A procedure for monitoring the project owner’s accomplishments and reporting requirements by the project owner’s management.

The Scope of Work

• Borrowers applying for grant funding must submit a scope of work to RBS
• The scope of work must contain the following:

1. Documented need for grant funds
2. Documented authority and ability of the borrower to administer the revolving loan fund
3. Documented ability to commit financial resources under the control of the borrower to assist in the establishment of a rural development program
4. Documentation that the borrower has secured commitments of significant financial support for supplemental support
5. A list of proposed fees and other charges
6. Borrowers policy for non-Federal funds 

Loans in conjunction with grants:

• Project feasibility studies
• Acquisition of technical assistance
• Business incubators by non-profit groups
• Community development
• Facilities and equipment for education
• Facilities and equipment for medical care

Application Submission and Review

Completed applications are accepted by the 14th day of the month

The following factors will be considered in the selection process:

• Nature of the project
• Job creation projections
• Loan-term improvements in economic development
• Diversifying the rural economy or alleviating under-employment
• Supplemental funds
• Economic conditions and job creation
• Unemployment rates
• Per capita personal income
• Change in population
• Number of long-term jobs
• Community-based economic development program
• Plan for improving the marketable skills of people in rural areas
• Location (rural)
• Support for the program - funds deposited in the cushion-of-credit account
• Demonstration project
• Probability of success

Sources of Funds

All funds for grants available under this program are provided by the following sources:

1. Interest differential credits to the Rural
2. Economic Development Sub-account

Maximum and Minimum

Maximum size of grants vary annually. Please contact the Area Office for current information.

Application should be made at the Rural Development Area Office. The Area Office staff will be glad to discuss services available from the Rural Development and explain how to prepare a written application.  To find the Area Office serving your county, click here.